The Financial Conduct Authority (FCA) has published guidance for general insurance firms on managing conflicts of interest arising from vertically integrated business models, warning that disclosing a conflict to customers does not remove a firm's obligation to actively manage it.
The guidance, published on July 23, 2026, comes from Chris Knight (pictured), who became the FCA's director of insurance within its supervision, policy and competition division this month. Knight joined the regulator after nearly two decades at Legal & General, where he most recently served as group chief risk officer.
Knight succeeded Matt Brewis, who left the FCA last year to join KPMG UK.
The guidance addresses business models where a single group spans multiple parts of the insurance chain, including underwriting, distribution, premium finance arrangement and other related services, as well as arrangements where firms are linked through ownership or financing relationships that may not be publicly disclosed.
"When a consumer buys insurance, they need to trust that the firm they're dealing with is genuinely working toward the best outcome for them, and that they're not losing out due to conflicts of interest," Knight said.
Having a conflict does not automatically make a business model unacceptable, according to the guidance, but firms must identify, manage and evidence those conflicts through effective governance, senior management accountability and controls that function in practice, not just on paper.
The regulator cited its 2017 action against Bluefin Insurance Services, then wholly owned by AXA UK, which was fined roughly £4 million for holding itself out as independent while running a strategy that prioritised placing business with its parent insurer without disclosing that policy to customers.
The guidance follows the FCA's first sector-wide Regulatory Priorities report for insurance, published in February 2026, which consolidated more than 40 individual portfolio letters into a single annual document addressed to boards and chief executives. That report set out four priorities, including improving consumer understanding and claims handling, widening access to insurance, supporting growth and innovation, and simplifying regulation, including a planned review of the Senior Managers and Certification Regime.
The FCA has stressed that simplification does not mean lighter enforcement, and this guidance follows that pattern, issued market-wide alongside letters already sent to firms the regulator considers higher risk. The intervention also captured Managing General Agents operating under delegated underwriting authority. The MGAA, the sector's trade body, has told members that the flexibility of the MGA model carries both opportunity and regulatory exposure under the 2026 priorities.
The timing coincides with sustained consolidation in UK broking, much of it funded by private equity. Commentary from this year's BIBA conference pointed to continued rapid acquisition by private equity-backed groups even as the number of independent mid-sized brokers shrinks, with senior figures in the market divided over whether that growth still serves clients.
Advisers to the sector have also noted that broker earn-out periods have lengthened materially since 2022, extending the financial ties between acquired firms and their new parents.
The concern is not confined to the UK. The European Insurance and Occupational Pensions Authority opened a consultation in February 2026 on supervisory expectations for insurers linked to private equity ownership, describing a decade-long rise in such structures across the EU.
The FCA said it has written directly to firms whose models it judges carry heightened risk and will monitor the area through ad hoc data requests. Firms should expect to demonstrate how their arrangements deliver good outcomes, simplify structures the regulator finds difficult to supervise, and notify the FCA promptly of material changes.
"Where we see firms acting in ways that could harm consumers, obscure accountability or undermine trust, we will act, starting with supervisory engagement, and with enforcement if needed," Knight said.
For firms built through acquisition, scale and structure are not the problem on their own. What the regulator wants evidenced is that governance has kept pace with the complexity those deals have created, and that commercial incentives inside the group are not shaping which products customers end up with.
